UBS goes beyond ‘traditional tech’ with new thematic China ETF

Mar 19th, 2021 | By | Category: Equities

ETF Strategy events are back! Please join us for breakfast briefings on Digital Assets & the Blockchain Economy on Thursday 2nd September 2021 (08:15-11:00) and Thematic Investing on Friday 3rd September 2021 (08:15-11:15) both at Yauatcha City, Broadgate Circle, London. Sponsors include First Trust, GHCO, MSCI, Rize ETF, VanEck and WisdomTree.


UBS has introduced an ETF providing exposure to a broader opportunity set of Chinese technology companies.

UBS goes beyond 'traditional tech' with new thematic China ETF

UBS’s new China technology ETF goes beyond traditional ICT to encompass industries such as electric vehicles, biotechnology, and robotics & automation.

The UBS Solactive China Technology UCITS ETF has listed on SIX Swiss Exchange (CQQQ SW), Xetra (UIC2 GY), and Borsa Italiana (CITE IM) and comes with a management fee of 0.47%.

It is based on the Solactive China Technology Index.

UBS is the third European issuer to tap into the Chinese technology theme following the launch of the HSBC Hang Seng TECH UCITS ETF (HSTE LN) in December and the more narrowly focused KraneShares CSI China Internet UCITS ETF (KWEB LN) in late 2018.

Both these funds have done well, amassing assets of $195 million and $335m, respectively, as Chinese technology has emerged as a high-profile opportunity for investors globally.

But China is not just in the vanguard of conventional information and communications technology, which is what the HSBC and KraneShares funds primarily home in on, it is also shaping up to be a leader in areas such as electric vehicles, biotechnology, and robotics & automation.

The Solactive China Technology Index has been designed to capture this broader, multidisciplinary technology trend, going beyond traditional technology definitions revolving around ICT.

It achieves this by including companies from the following nine industries as defined by the FactSet Revere Business Industry Classifications System: Future Cars, Healthcare Innovation, Genomics, Social Media, Digital Entertainment, Blockchain, Cyber Security, Cloud Computing, and Robotics & Automation.

The index comprises the 100 largest companies headquartered or incorporated in China that derive the majority of their earnings from one of these nine industry groups.

Companies do not need to be listed in Mainland China or Hong Kong to be eligible; indeed, the index includes a number of Nasdaq and NYSE-listed stocks. China A-shares are included with an inclusion factor of 20% and must be available for both buy and sell orders via the Northbound Shanghai or Shenzhen Stock Connect schemes to be eligible for admission.

Constituents are weighted by free-float-adjusted market capitalization, subject to an individual security weight cap of 10%. Major holdings currently include Tencent (10.9%), Alibaba (10.6%), Meituan (10.5%), Baidu (7.0%), KE (Beike) (5.2%), NIO (5.2%), Netease (3.9%), WuXi Biologics (3.7%), Lufax (3.6%) and Beigene (2.3%), as of 18 March 2021.

The index is rebalanced quarterly.

Commenting on the launch, Clemens Reuter, Global Head of ETF & Index Fund Client Coverage at UBS Asset Management, said: “We have had a presence in China for several decades and have built deep expertise in the country. This new ETF is part of UBS AM’s strategic focus to provide investors with innovative exposure to one of the world’s fastest-growing markets.

“The fund incorporates stocks beyond ‘traditional tech’, including exposure to areas such as social media, future mobility or medical technologies companies, and shows our strength to create products that align client interest and China’s long-term economic trends.”

Timo Pfeiffer, Chief Markets Officer at Solactive, added: “China’s innovation potential is driven by the country’s ambition to become the number one in virtually any discipline. This aspiration bears immense growth potential, which investors can now easily access through UBS Asset Management’s new China Technology ETF. UBS AM recognized investors’ demand in this space, and we are very happy to contribute with our index to this promising fund release.”

The fund trades on SIX Swiss Exchange in USD and on Xetra and Borsa Italiana in EUR. A euro-hedged share class is also available at a fee of 0.52%.

Tags: , , , , , , , , , , ,

Leave a Comment